Estimated Ultimate Recovery (EUR)

What Is Estimated Ultimate Recovery?

Estimated ultimate recovery (EUR) is a production term ordinarily utilized in the oil and gas industry. Estimated ultimate recovery is a guess of the quantity of oil or gas that is possibly recoverable or has previously been recuperated from a reserve or well.

EUR is comparative in concept to recoverable reserves.

Grasping Estimated Ultimate Recovery

Estimated ultimate recovery can be calculated utilizing many contrasting methods and units relying upon the project or study being led. In the oil and gas industry, of the utmost significance drilling projects meet an acceptable EUR threshold for a project to be thought of as viable and profitable.

A more exact definition of EUR is "found oil reserves" and there are three categories, each in view of the degree of probability that the oil can be recuperated utilizing current technology.

1. Proven Reserves — There is a greater than 90% chance that the oil will be recuperated.
2. Probable Reserves — The chance of really getting the oil out is greater than half.
3. [Possible Reserves](/potential reserves) — The probability of recuperating the oil is critical, however under half.

Keep as a main priority that part of an oil field's probable and potential reserves are changed over into proven reserves over the long run. These reserves can be re-ordered for a number of reasons going from improvements in oil recovery methods and strategies to replacing oil prices. For instance, as oil prices rise, the quantity of proven reserves additionally rises in light of the fact that the breakeven price of recovery can be met. Reserves that were too costly to deliver at lower oil prices become viable as oil prices rise. This makes it conceivable to rename these more costly reserves as proven. The inverse occurs as oil prices fall. On the off chance that oil reserves become too costly to recuperate at current market prices, the likelihood of them being delivered additionally falls. This outcomes in reserves being renamed from proven back to probable or even conceivable.

EUR's Use to Value Oil Reserves

Without an estimated ultimate recovery, oil companies wouldn't have the option to pursue levelheaded speculation choices. Like all projects, management should have the option to estimate accurately the net present value (NPV) of an oil drilling project. This valuation exercise requires several information sources, similar to the cost of carrying the main barrel to production, the cost of capital, the long-term price of oil and the ultimate amount of oil that will be created, or EUR. Without an EUR, it wouldn't be imaginable to arrive at an accurate valuation of the potential oil reserves.

Features

• EUR is utilized by oil companies, as well as analysts and investors, to register the NPV for oil exploration and drilling projects and the expected corporate profits associated with that.
• Estimated ultimate recovery (EUR) alludes to potential production expected from an oil well or deposit.
• EUR is comprised of three levels of confidence is the amount of oil yet to be recuperated: proven reserves; probable reserves; and potential reserves.